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Business Economy

India adds 45 mn sqft of industrial & warehousing space in 2021: Report

Mumbai, Jan 6 (UNI) Even as the Covid-19 pandemic-induced restrictions and subsequent lockdowns impacted construction activities, India witnessed a fresh supply of 45 million sqft of industrial and warehousing in 2021, a recent report said.
According to a report by real estate advisory firm Savills India, industrial and warehousing space absorption stood at 44 million sqft in 2021 to include 35.1 million sqft from Tier I cities and 8.6 million sqft from Tier II & III cities.
The report stated that out of the total fresh supply of 45 million sqft in 2021, 36 million sqft was added in Tier I cities, while 8.9 million sqft in Tier II & III cities.
Similar to 2020, 3PL and e-commerce sectors continued to drive warehousing demand accounting 62% of the total absorption in 2021, followed by the manufacturing sector at 14%, it said.
Among the major cities in India, Delhi NCR led with the highest absorption in 2021 at 18% followed by Pune at 15%. Mumbai and Bangalore saw absorptions at 14% and 11% respectively, while Tier II & III cities accounted for 20%.
In addition, the Tier II & III cities such as Rajpura, Lucknow, Coimbatore, Jaipur, Guwahati, Bhubaneswar, Nagpur, Kochi/Ernakulam, Indore, Hosur, and Patna witnessed around 8.6 million sqft of absorption in 2021.
“These cities are poised to gain further momentum in 2022 and 2023 with e-commerce and 3PL firms capitalizing on consumption-driven growth and pushing the demand for warehousing space. The overall industrial and warehousing space stock in Tier I cities is at 266 million sqft at the end of 2021 and is expected to reach 304 million sqft in 2022 and 345 mn sqft in 2023,” the consultant said.
Meanwhile, vacancy levels in Tier I cities increased from 8.4% in 2020 to 9.4% in 2021 and rental values remained stable in 2021 across the major cities with new projects delivered with improved specifications and of high quality environmental, health & safety (EHS) standards.
The market witnessed 4,200 plus acres of manufacturing and warehousing land transactions across Tier I and II cities of which 51% was private land and 49% was government land.
The report further highlights that the industrial and logistics sector witnessed investments exceeding USD 1.5 billion in 2021 making the sector the highest after the office sector to attract such investments. Continued interest in this asset class was due to its growth potential and stable returns. The market is likely to witness continued and growing interest from investors in this asset class in 2022 as well.
“Work from home and social distancing norms have further fuelled the e-commerce demand and therefore growth of the Indian logistics and warehousing sector. Rising popularity of quick commerce companies and e-commerce companies focusing on improving the delivery time and customer experience will result in rapid growth of urban warehousing,” Savills India Managing Director, Industrial and Logistics Srinivas N said.
He further noted that the recent reforms announced by the government in tightening import regulations, subsidies in terms of Performance Linked Incentives (PLIs) to attract foreign capital and companies mulling over ‘China-plus-one’ strategy triggered due to Covid outbreak have resulted into a major transformation in the Indian manufacturing sector.
“Besides, strong macro-economic fundamentals, government initiatives favouring infrastructure development in transport, water, power and communications and support to the growing sectors are likely to drive manufacturing and warehousing demand in India in 2022,” he added. Srinivas N, Managing Director, Industrial and Logistics, Savills India.
According to Savills India, growing demand for warehouse space for manufacturing, e-commerce and organised retail are likely to drive warehousing demand in 2022. Besides, the warehousing policy envisaged by NHAI would be out in 2022, which aims to develop warehousing zones on the National Highways Authority of India (NHAI) land banks under PPP mode, proposed national logistics policy by department of commerce likely to ease the logistics bottlenecks and development of multi-model logistics parks (MMLPs) will certainly push the growth of warehousing in the country.
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